Roel van der Veen, for Addis Standard
Development in the non-Western world
In the 1870s Japanese public intellectual Yukichi Fukuzawa shocked his audience by stating that he thought Japan should leave poor Asia and join the modern world. Japan in those days was going through a phase of rapid change, which would eventually lead to Japan becoming a modern nation and the leading nation in Asia. Yukichi Fukuzawa, who founded a university and Japan’s first daily newspaper, travelled extensively in America and Europe, and his books about the development of the West became bestsellers in Japan. The provocative, brave ideas of Yukichi Fukuzawa angered many Japanese, but more important, inspired millions of his countrymen to support Japan’s modernization effort, thereby improving people’s lives. How does this story of 150 years ago in a very different part in the world, connect to Ethiopia and Africa?
Over the last decade, several African countries have made impressive progress in growing their economies and to some extent, reducing the poverty of their populations. Ethiopia has been one of them. Economic growth has in some years reached ten percent, and poverty has been reduced from about 70 percent of the population at the beginning of the 1980s to about 35 percent now, all in the context of a rapidly growing population. After centuries of limited wealth for only a small elite amidst mass poverty, should this improvement come as a surprise? Not really. I’ll explain.
For years scholars and politicians have thought that poor countries could not become richer because the rich countries kept them down. However, the rise of the poor countries in Asia over the last half a century, has falsified this theory. Many Asian countries have reached high or middle-income status, thereby joining, each in their own way, the modern world. How was this possible? Why did countries in Asia become substantially richer, whereas countries in Africa did not?
The Tracking Development research project
Dutch development co-operation sponsored a big international research project called ‘Tracking Development’, involving several African and Asian scholars to find out what governments in Asia had done to make their countries richer, and why governments in Africa had not done the same thing. In the project countries in South East Asia were compared with countries in Sub Saharan Africa, countries that were similar in many aspects, but differed in one crucial aspect: the Asian country became substantially richer, whereas the African county did not. Take the Indonesia – Nigeria comparison. Both countries are very big (by far the biggest in their regions), have a colonial past (with subsequent new state structures), have large natural resources (especially oil), are very corrupt, have very poor governance, have a large Islamic population, ethnic diversity, strong and politically active military, et cetera. But Indonesia became richer, whereas Nigeria did not. Why?
After several years of hard work and many lively discussions, the project came up with answers, some of them quite surprising (also to me, I must admit). The main thesis of the project, well explained by the project’s main researcher prof. David Henley from Leiden University (in his book Asia – Africa development divergence, Zed Books, London, 2015), is that countries will have their economic take-offs when three policy results have been achieved simultaneously. First, a government should provide macro-economic stability (so no high inflation, a balanced budget and the real value of the currency).Second, it should provide economic freedom for its farmers and small entrepreneurs (to sell their products at a market to whomever they like). And finally, and this was the big surprise to me, they should spend massively, and be pro-poor, in agriculture, to vitalize the economy of the countryside (for better seeds, training for farmers, fertilizer, small roads to connect to markets et cetera). More home grown food will feed the nation better, will save money (because no food has to be imported, it might at some stage even be exported), it will raise the incomes in the countryside, lower food prices in the cities (thereby making the population more competitive at the later stage of industrialization) and will set the stage for the first stage of industrialization, which almost always consist of food-processing. The main lesson is thus: agricultural development comes before industrialization.
So we know what South East Asian governments achieved, but how did they do it? How could they implement these policies with the poor and ineffective states of that time? In other words: what was the governance involved? David Henley gives straight answers to this important question by identifying three principles of the successful development strategies. It is amazing how much these principles differ from the principles of what we donors call ‘good governance’. First: outreach (or quantity, not quality). You have to reach the millions of poor people if you want to have an impact on poverty. Here we see the link with agriculture. The only way to really reduce poverty is to go were the poor masses live, which is in the countryside. Second: urgency (or priorities, not plans). Go for the few things that really need to be done, and use all capacity available to achieve it. Forget about the nice elaborated plans with their tens of objectives, drawn up by experts, because these objectives will never be achieved that way. And thirdly: expediency (or results, not rules). In a way it doesn’t matter how you do it (by breaking the rules or not), as long as you achieve the desired results.
But why did governments in South East Asia do this, and African governments not? In my personal view the answer lies in something quite simple: the number of people. At the time nations in South East Asia had their take-offs, the countryside was densely populated, mainly with poor peasants, who tended to go communist (it was the time of the Cold War). So it was really out of their own self-interest that governments decided to improve the lives of these poor people, so that they would become less angry towards the authorities. For the politicians it was purely done out of self-interest, it was the life insurance of the regime. In the same decades in Africa such forces did not exist, because the countryside was only sparsely populated. Politically speaking in Africa it would have been irrational to waste substantial money on the farmers. It made more sense to keep the jobless youth in the cities quiet by providing jobs in industry. This political rationality had the unfortunate, even tragic, consequence that no take-off followed, because (as we now know) starting with industrialization is starting at the wrong end.
Can Africa learn from the lessons of South East Asia? I don’t think there are blue prints of development. Even in South East Asia itself there are exceptions. Take Singapore, which does not even have a countryside. But the experience of that Asian region at least suggests which paths to development might be successful. And as David Henley always underlines: why not try? Because over the decades, with extremely fast population growth in Africa, the African countryside is beginning to look like the South East Asian countryside of fifty years ago. Political rationality is therefore changing in the right direction. Surely it is no co-incidence that countries with the most densely populated countryside, like Ethiopia and Rwanda, have the best developmental policies.
So does Ethiopia do the right things?
Looking at the statistics concerning growth and poverty reduction, the answer is simple: certainly, yes. The government was able to keep the macro-economic situation stable at sound levels and it has invested massively in the countryside. On economic freedom it could do better, but apparently this is not very harmful to the overall picture. Must we therefore applaud the Ethiopian government for its policy choices? Of course we must, but we need to be a bit nuanced here, because policy choices don’t fall from the sky just like that. There are good reasons why politicians make their choices – in a way they are forced to do so by the political forces working on them, although we like to think they have the freedom to make their choices.
Understanding the findings of the ‘Tracking Development’ project, we could more or less predict this would happen. The forces that are increasingly working on the Ethiopian government are the same forces that made the successful development policies of president Soeharto of Indonesia appear fifty years ago: a more densely populated countryside, with a majority of poor and potentially hostile peasants, who could make life very difficult for the government if their situation would not improve. So it is one of those rare occasions when the self-interest of the government (to politically survive) aligns with the self-interest of the majority of the people (to get a better life).This is the moment that policies can be implemented to start sustained development.
But right now we cannot say for sure if the take-off has already taken place. It might be, but it is simply too early to tell. There are always dangers that can still cause havoc to a promising start. To mention some for Ethiopia: the country is a haven of stability in a very unstable region, but this stability could easily be threatened by becoming involved in the violence from abroad or by unduly efforts to liberalize the Ethiopian state. Another risk is that the government, under pressure from all kinds of advisors and city-dwellers, will decide to try to industrialize, at the expense of agriculture. In Africa there is always this pressure, but it should be ignored as long as possible. To industrialize too early has the danger to ruin the current development project. The country should stay on the current development course for at least several more years.
This should not be too difficult. Africans have a tendency to blame the international environment for their hardships (often rightly so), but this does not hold for the future. In fact, the international environment is very promising for a country like Ethiopia. Especially for Ethiopia, I would say. Being stable in an unstable region, the country receives a lot of foreign aid to retain its stability. In return, it does not have to follow orders from anybody, because in nowadays multipolar world, it can choose its own partners – the West is no longer dominant. And with the growing world population, there will be a huge market for Ethiopian agricultural products in the years ahead. It looks all very favorable for sustained development in Ethiopia.
I always found the statement by Yukichi Fukuzawa, that Japan should leave poor Asia, intriguing. It signaled the birth of a new era not only for Japan, but in the end for all of Asia. Japan led the way, because after some time it was followed by its former colonies Taiwan and South Korea, which were then followed by Hong Kong and Singapore, et cetera. One after the other had its take-off, to fly following the ones in front. Observers recognized the pattern of flying geese in the air, in their peculiar v-formation, and called this pattern of development the flying geese model. So the thing is that as a country you can indeed leave a poor region, but that at some point your example will be followed by others, who will try to leave too. In the end, the whole region will have moved, from poverty to better lives.
Such a thing is about to happen for Africa as well. Ethiopia can leave Africa, but it will discover its example will be copied, and Africa will come after her, joining her as part of a materially richer world. So maybe we should speak of ‘leading’ instead of ‘leaving’. The difference is just one letter, and the difference in significance is indeed also very small. At the moment there are just a few candidates to become the first goose to lead the group, among them Rwanda (using a similar model as Ethiopia) and Ghana (using a more liberal model). The jury is still out which country will be the first to leave poverty and lead Africa in development.
Ed’s Note: Roel van der Veen is professor of International Relations at the University of Amsterdam. He wrote books on the development of Africa and Asia. He is also the Academic Advisor of the Netherlands Ministry of Foreign Affairs. He presented this lecture at UN ECA in Addis Ababa on April 22, 2015.